Q: In an answer early this month when reviewing BYD's last quarter's results, you said "BYD notes that negative trends are continuing into the Q4, and it is still looking at ways to reduce costs. Certainly these are not great numbers, and the trend here is becoming somewhat concerning."
However, in some recent answers where members were asking for potential stocks to consider, including in the industrial space, BYD has been recommended. Why is it being recommended, given your assessment of the last quarter's results. Many thanks.
However, in some recent answers where members were asking for potential stocks to consider, including in the industrial space, BYD has been recommended. Why is it being recommended, given your assessment of the last quarter's results. Many thanks.
5i Research Answer:
It is true that the recent operating results do not look great due to weak same-store-sales growth and low total revenue growth. That being said, looking out over the long term BYD is still a great performer. In fact, BYD is one of the best performers in the Canadian market, compounding around 22% in the last 20 years.
Hardly in the business world do companies just keep going straight up. There are some years when business is doing great and some years when the pace of business is slow, what matters is the company’s performance over time. We think one year should not make a trend yet; investors should give BYD some time, given its track record. If the company can manage to resume strong growth, it could see some decent upside potential from here.